Governor vetoes hospital-expansion certificate program

COLUMBIA — Among her list of budget vetoes, Gov. Nikki Haley has axed the state’s hospital-expansion regulatory program, known as the Certificate of Need process.

The so-called CON program’s funding was a section of H. 4813, the state’s general appropriations bill for the fiscal year that began this month, which includes $6.7 billion in state money. In targeting the CON program, the governor’s veto message specifies $727,189 in total funds.

“I believe in the virtues of free markets and open competition, and for that reason, I am vetoing the Certificate of Need program, as I did last year,” Haley wrote in her veto message, which targeted 74 specific items across various agencies.

“Bureaucracy should not be telling us which community has or does not have sufficient need for a hospital or a particular piece of complex medical equipment.”

Haley vetoed a host of other health programs, including: a $200,000 earmark to combat head lice, $100,000 for a sickle cell foundation, $100,000 to help hemophilia sufferers, $500,000 for the S.C. Office of Rural Health benefit bank, and $453,680 for the S.C. Coalition Against Domestic Violence and Sexual Assault.

“Through this process, the Department of Heath and Environmental Control is essentially responsible for guarding the gates for a cartel of health-care facilities that have received their (certificates of need) and now have a vested interest in denying them to other prospective health-care providers,” Haley wrote.

State lawmakers must return to Columbia to vote on whether to uphold or override the governor’s vetoes. It is unlikely they will sustain the governor’s veto against the CON program.

The S.C. Hospital Association and top hospital executives in Georgia and North Carolina have publicly offered their support for states to operate with a certificate of need program. South Carolina and Georgia are among about three dozen states that use CONs to make sure duplicate services do not drive up costs and leave low-income and rural communities without an accessible medical facility.

In a recent interview with Bluffton Today, the president and CEO of St. Joseph’s/Candler Health System said the CON framework ultimately serves the public.

“I think CON is cost-effective,” Paul Hinchey said.

“Decision-makers don’t have a dog in the fight,” he said, adding that they instead “have community at heart. ... I’d rather have that level playing field. End game is worth it.”

Last month, St. Joseph’s/Candler in Savannah filed an appeal in the S.C. Administrative Law Court against a certificate of need the state health agency had awarded to competitor Hilton Head Hospital to build an $18 million Bluffton Outpatient Center.

The move followed an extended back-and-forth process with agency staff and board members. SJC has argued that in order for the proposed outpatient center to meet its viability projections, it will have to shift patients away from existing facilities.

Advocates of CON point out that health services are not a commercial product, such as pizza, that follows ordinary competitive market rules. Hospitals are required to care for people, regardless of patients’ ability to pay for care, and government reimbursement rates for low-income patients are set.